Congress offers $30 billion water-reuse tax break—mostly to big industry

What it does

This bill creates a 30% federal tax credit for businesses and utilities that invest in water reuse projects—systems that recycle water for industrial, manufacturing, data center, or food processing operations instead of using fresh groundwater. The credit applies to the cost of installing, replacing, or modifying on-site recycling systems, or to municipal water recycling infrastructure, and expires for projects begun after December 31, 2032.

Why we flagged it

The bill's operative mechanism is a tax credit (30% of qualified investment) designed to encourage private and municipal adoption of water reuse infrastructure. It is a subsidy-by-tax-expenditure, not a regulatory mandate or direct appropriation.

What the text implies

• The credit may be claimed by utilities that receive property transfers from private entities under binding agreements, creating a potential arbitrage: a private firm could transfer equipment to a utility and claim the credit while the utility cannot, effectively allowing the private party to monetize the credit without owning the asset long-term.
• The 30% credit is not capped by dollar amount or per-project limit, meaning large industrial water recycling projects could generate substantial tax credits with no aggregate spending ceiling.
• Data centers are explicitly named as eligible facilities, potentially directing significant credits to a high-growth, capital-intensive sector with concentrated geographic footprints.
• The credit terminates after 2032, creating a cliff that may incentivize front-loading of projects before the deadline rather than steady long-term investment in water infrastructure.

Section numbers refer to the bill text the analysis read — linked under Primary records below.

Who it affects

The bill incentivizes water conservation and recycling infrastructure without restricting citizen rights or imposing new costs on the public. Water reuse reduces pressure on freshwater aquifers and municipal supplies, benefiting long-term water security and environmental sustainability. The tax credit is a voluntary incentive mechanism—businesses choose whether to participate—and the public gains from reduced freshwater depletion.

Who stands to gain

• industrial and manufacturing companies
• data center operators
• food processing companies
• municipal water utilities
• water technology and recycling equipment suppliers

Named in the bill

Internal Revenue Code of 1986, Section 48F (new), Section 46, industrial facilities, manufacturing facilities, data centers, food processing facilities, municipal water providers, utilities

Where it stands

25 cosponsors: 18 Democrats, 7 Republicans.

• Apr 17, 2025 — Introduced · Congress.gov: “Introduced in House”
• Apr 17, 2025 — Referred to House Committee on Ways and Means · Congress.gov: “Referred to the House Committee on Ways and Means”

Dates and quoted wording are Congress.gov's action record; the timeline shows status changes, not every procedural step.

Money around this bill

14 lobbying clients named this bill on 20 disclosure filings across 3 quarters, Dec 2025 to Jun 2026. Those filings disclosed $55,890,396 in lobbying spend. A filing names 8 bills on average, so that figure is what each filing reported, not a share belonging to this bill.

More lobbying clients named this bill than 94% of bills with at least one filing.

Darin LaHood, the sponsor, reported $1,837,341 in PAC receipts in the 2026 cycle.

• Chamber of Commerce of the U.S.A. — $54,660,000 on 3 filings
• Diageo North America — $400,000 on 1 filing
• Dupont De Nemours, Inc. — $130,000 on 2 filings
• Association of Metropolitan Water Agencies — $120,000 on 1 filing
• National Water Resources Association — $120,000 on 1 filing

Lobbying Disclosure Act filings through Jul 21, 2026. A filing shows who paid to lobby on a bill it names, not what changed.